Vanuatu Real Estate & Vanuatu Residency
This article about buying Vanuatu real estate was written by Richard Butler, current special economic commerce envoy and former trade commissioner from 2012 to 2015 and reappointed in April 2017 for a further 2-year term. Mr Butler has been a real estate developer since 1980 and has developed since 2008 with an office in both Sydney Australia and Port Vila Efate Island in the Republic of Vanuatu, a tax friendly nation. This article goes over buying real estate in Vanuatu, Vanuatu residency options, Vanuatu investments, and taxes.
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Guide to Buying Real Estate in Vanuatu
As a commercial or property investor, the Republic of Vanuatu actively encourages your investment. Please allow me to welcome you on behalf of the people and the government of Vanuatu.
Your life experience and investment are being sought out for the development of this South Pacific island nation, which is ideal for relocation, retirement, or a straightforward investment. Vanuatu is an emerging nation that I like to call the “Hub of the South Pacific Island Nations.”
There is no restriction on how much you can invest or how large a development investment you can decide to make. You can apply for permanent residency in Vanuatu with a minimum investment of $55,000 USD. This includes such investments as a sustainable timber plantation project as a shareholder, or as an investor in tropical agriculture farm, where minimum investments begin at $100,000 USD. Other investment options include resort, residential, or commercial property development. And yes, there are no personal or corporate taxations, no death duties, and no capital gains tax.
There is a valued add tax (VAT) of 12.5% on purchases of goods and service as well as a 15-30% import tax, however, exemption of this tax is available for resort projects that have a nation building effect
A detailed 2005 report by the World Bank encouraged the Republic of Vanuatu to develop a national strata act to encourage investors worldwide to invest with confidence in Vanuatu through titled land ownership. The government of Vanuatu also wanted to encourage developers to develop tourism and agriculture endeavours in Vanuatu. These are the two largest sectors of GDP in Vanuatu.
The Strata Act allows interested investors from around the world to have the security of title on their investment. The continuity of title is assured, allowing investors to resell or transfer the property to another. This is different from the real estate lease, which has a 75-year term. A vast majority of leases are re-signed for a further 75 years with land rental adjustments when terms expire.
There are no provisions for Freehold land in Vanuatu. Land cannot be purchased outright, being technically owned either by the government or a custom owner. As with most Pacific Nations, however, land can be leased.
In Vanuatu, these leases are mainly for 75 years (which just so happens to be the life of a Coconut tree). A small annual rent is applicable and is typically several hundred US dollars per year. Leases are renewable before or at the end of the term, on the following bases: 10% of the unimproved value, as estimated by the government valuation department. At this time, the annual rent will be negotiated for the term of the lease, on the same basis. These rules apply to everyone regardless of background.
Guide to Vanuatu Residency & Citizenship
Permanent residency options are available, including retiree and investor residency programs. An Investor Residency can last up to 15 years depending on the investment.
Although citizenship is typically applied for after 10 years of residence in Vanuatu, in early 2017 the government introduced new methods for investors to obtain citizenship and Vanuatu passport
Vanuatu Residency Options
1. Real Estate Option
An investor can purchase into an approved resort /residential development such as www.pacifichavenresort.com. The investment is a minimum $250,000 USD. For an additional $200,000 USD, you will receive a passport and citizenship. This is of course subject to certain qualifications, such as good standing with your local police, relative health, a supporting income from outside Vanuatu from such sources as rental returns, employment, or shareholding income.
2. Government Capital Investment Plan Option
An investor can obtain a passport and citizenship for both himself, a spouse, and 2 children under 18 years old, through a Vanuatu approved native citizen migration agent, for a cost of $235,000 USD. There are provisions for the further reduced cost for adults such as grandparents.
We can provide this service as well as the services of temporary visa, work visa, company formation, business setup and be consulting, Vipa business licensing, family trusts, the establishment of a bank account, and management of your Vanuatu company on a nominee basis.
More on Real Estate in Vanuatu
The French influence is strong in Vanuatu, which won independence from Britain and France in 1980. As you arrive at the airport, there are signs in English and French, as in Quebec. As you go towards the central bank, you go past Avenue Charles de Gaulle which leads into Winston Churchill Street.
The “Ni-Vanuatu” are charming, less aggressive than other Melanesians. The language, Bislama, is pidgin French and English, entirely phonetic – “smol bisnis senta” means small business center. There is a wonderful yacht harbour, and great French restaurants. Many French people choose to retire in Vanuatu from New Caledonia. Vanuatu is inexpensive if you are from a western country, and very hospitable to foreigners.
The coastline is beautiful and Vanuatu has Champaign Beach on the Northern Island of Santos, known as one of the best in the Pacific and a popular docking point for many cruise ships.
Property prices have been steadily increasing over the years. The buoyancy in the market has been retained for several reasons: Chinese moving offshore, Australians and New Zealanders pulling out of their over-regulated countries, and the perception by investors that the Vanuatu Government genuinely wishes to attract foreign investment, particularly in tourism.
No land in Vanuatu is freehold. Leases up to 50 years for residential lots (75 for commercial ones) are available. There are no restrictions on foreign ownership of property, other than land.
Yields are moderate to high in Vanuatu.
Residential property prices are around $200,000 to $1.5 million.
A $200,000,100 sq. m. property might rent from around $1,500 to 2,000 per month. Many luxury waterfront properties are now renting to holiday makers. Rental yields for larger properties, which are in demand with the international companies requiring them for staff, are from $1,000 to $3,500 a month.
Taxes in Vanuatu
Property transactions are done in several currencies, including the Vanuatu Vatu (VUV).
Rental income tax is moderate in Vanuatu at 12.5%
Rental Income: Rental income from leasing property is taxed at a flat 12.5%.
Capital Gains: There is no capital gains tax.
Inheritance: There are no inheritance taxes in Vanuatu.
Residents: Rental income from leasing property is taxed at a flat 12.5%.
Costs of Buying Real Estate in Vanuatu
Total transaction costs are moderate in Vanuatu.
The round-trip transaction costs, i.e., the total cost of buying and selling a property, are 2% for stamp duty and 5% for government registration fees.
Other costs include lease transfer and the solicitor’s fees, plus 12.5% VAT on new land estates, if excluded from developer’s price sheet.
Rental Income: Rental income from leasing property is taxed at a flat 12.5%, which is added on to the tourist bill when checking out in hotels and resorts.
When selling, a 5% real estate agent’s commission is standard.
Vanuatu doesn’t have tenant protection laws.
There is no landlord-tenant law in Vanuatu. So landlord and tenant relations are governed entirely by the contract, and can be freely agreed upon.
Volcanoes, Hurricanes and the Economy
Vanuatu, an archipelago of approximately 83 islands, is situated in the South-Western Pacific Ocean. Since independence in 1980, Vanuatu’s local tourism industry has flourished, providing experiences not found elsewhere in the world.
The Pentecost Land Dive and the Toka Ceremony on Tanna island draw visitors from all over the world. Scuba diving is important. Vanuatu also has a significant offshore financial center.
However, real GDP per capita had been stagnant through the 80s and 90s, with changes from the membership to the World Trade Organization 156th membership, infrastructure development is now booming. About three-quarters of the country’s population of approximately 280,000 live in rural areas and practice subsistence agriculture, and their numbers are fast-growing.
Most of Vanuatu’s 83 islands are inhabited. Some have active volcanoes; others are covered by tropical rainforests. The climate varies considerably from tropical to subtropical according to exposure to trade winds and elevation.
Vanuatu is in the South Pacific part of Oceania, prone to earthquakes, tidal waves and hurricanes as are most countries of the South Pacific Rim, from Japan to New Zealand. House building now requires cyclone engineering to be a part of the construction process, to guard against such natural disasters.
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